GST on catering services depends on the nature of the catering supply. The rates may vary depending on where the service is provided and the applicable tax rules. Catering services may attract 5% GST without Input Tax Credit (ITC) or 18% GST with ITC (specified premises). Hotel and banquet catering also requires checking whether the premises qualify as a specified premises under the rules applicable from 1 April 2025.
Since GST rates and conditions can change through notifications and amendments, businesses should verify the applicable treatment for their specific catering arrangement before charging or claiming GST.
Key Takeaways
- GST is applicable to catering services in India, including restaurant, outdoor, corporate canteen, and home-based catering.
- The applicable GST rate depends on the type and nature of catering service provided.
- Outdoor catering services generally attract 18% GST with Input Tax Credit (ITC) benefits.
- Corporate and industrial canteen services attract 5% GST without ITC.
- Hotel and banquet catering rates depend on the applicable hotel room tariff.
- Catering businesses must register for GST once they cross the applicable turnover threshold.
- GST-registered catering businesses need to file returns such as GSTR-1 and GSTR-3B, and GSTR-9 where applicable.
- Certain services, such as eligible mid-day meal schemes and some charitable or educational institution food services, may be exempt from GST.
- Proper GST registration, invoicing, return filing, and ITC compliance help catering businesses avoid penalties and maintain compliance.
Types of Catering Services and GST Applicability
- Restaurant Catering Services: If you operate a restaurant, you must charge GST on the food and beverages provided. The GST rate for restaurants depends on whether the restaurant is air-conditioned or not.
- Outdoor Catering Services: For events like weddings, parties, or corporate functions, outdoor catering services are subject to GST, but they have different tax rates and potential for ITC claims.
- Corporate Canteen Catering: If you are providing meals in corporate offices or industrial canteens, this too is subject to GST, though the rate is generally lower (5% without ITC).
- Home-Based Catering: If you offer services from home and your annual turnover exceeds the limit, you need to register for GST and comply with GST norms just like other catering businesses.
GST Rates on Catering Services and Food Supply
It’s important to know which tax rate applies to your specific business to ensure that you charge the correct GST and remain compliant with the tax laws.
1. Catering Services Provided at Restaurants
- Air-Conditioned Restaurants: If the food is served in an air-conditioned restaurant, the applicable GST rate is 5%.
- Non-air-Conditioned Restaurants: If the restaurant is non-air-conditioned, the GST rate is 18%, but without ITC benefits. This means you cannot claim back the GST paid on your purchases.
Example:
If you operate an air-conditioned restaurant and a customer’s total bill comes to ₹2,000, you must charge 5% GST, which is ₹360. The total bill with GST would be ₹2,360.
2. Outdoor Catering Services (Weddings, Parties, Corporate Events)
Outdoor catering services such as catering for weddings or corporate events attract a GST rate of 5%.
- Outdoor catering (weddings, parties, events at non-specified premises): 5% GST, no ITC.
- Outdoor catering at specified premises (hotel with room value above ₹7,500): 18% GST, with ITC.
Example:
A catering company that charges ₹1,00,000 for a wedding event will charge 5% GST, which comes to ₹18,000. Therefore, the total invoice will be ₹1,18,000. The business can also claim ITC on GST paid for ingredients, labor, and other business expenses.
3. Corporate Canteen Services
If you provide catering services in a corporate canteen or industrial canteen, the applicable GST rate is 5%, with no ITC available.
Example:
If you charge ₹50 for a meal in a corporate cafeteria, the GST will be ₹2.50 (5% of ₹50), and the total charge to the customer will be ₹52.50. Since no ITC can be claimed, you cannot offset the GST paid on any purchases made for the canteen.
4. Hotel and Banquet Catering Services
For hotels and banquet halls, the GST rate on restaurant and catering services depends on whether the premises qualify as a “specified premises” under the applicable GST rules.
From 1 April 2025, the specified-premises test is based on the actual value of accommodation supplied by the hotel exceeding ₹7,500 per unit per day in the preceding financial year. Hotels can also opt to be treated as specified premises, subject to the prescribed conditions.
- Specified premises: GST on restaurant/catering services is generally 18% with Input Tax Credit (ITC).
- Other premises: GST is generally 5% without ITC.
Example:
If a hotel qualifies as a specified premise based on the applicable accommodation-value test, catering services supplied there will generally attract 18% GST with ITC. If the premises is not a specified premises, the applicable rate is generally 5% without ITC.
How to Register for GST in the Catering Business?
If your catering business has a turnover of ₹20 lakh or more (or ₹10 lakh for special category states), you are required to register for GST.
Steps to Register:
- Visit the Portal: Go to the official GST portal.
- Create a New Registration: Select the “New Registration” option.
- Fill in Your Business Details: Provide your business name, PAN number, email address, and mobile number for OTP verification.
- Upload Documents: The documents required for registration include:
- PAN card of the business owner.
- Address proof (such as utility bills or lease agreements).
- Bank account details.
- Business registration certificate if applicable (for companies or partnerships).
- Obtain GSTIN: After document verification, you will receive a GST Identification Number (GSTIN), which you can use to charge GST on your invoices.
Input Tax Credit (ITC) for Catering Services
One of the significant benefits of GST is the Input Tax Credit (ITC), which allows businesses to claim a credit for the GST paid on purchases related to their business operations. However, ITC eligibility varies based on the GST rate charged.
Claiming ITC
- 5% GST: The concessional 5% rate applicable to specified restaurant and catering services is generally without ITC.
- 18% GST: Where catering or restaurant services are taxable at 18%, such as supplies covered by the specified-premises framework, ITC can generally be claimed, subject to the normal conditions under GST law.
- ITC conditions still apply: Even where the applicable rate permits ITC, the recipient must satisfy the statutory requirements for claiming credit, including having a valid tax invoice and receiving the goods or services.
Compliance and Filing GST Returns for Catering Businesses
Once your business is GST-registered, you must file GST returns regularly, either monthly or quarterly, depending on your turnover. The types of GST returns to file are as follows:
1. GSTR-1: This is the outward supply return that contains details of sales made by the business. You must file this return either monthly or quarterly, depending on your turnover.
2. GSTR-3B: This is the summary return where you declare the tax payable on the sales made during the month, along with the input tax credit.
3. GSTR-9: If your business has an annual turnover of Rs. 2 crore or more, you must file this annual return, summarizing the details of all outward supplies, input tax credit, and tax paid.
GST Exemptions in Catering Services
Several catering services may be exempt from GST or fall under reduced tax rates under certain conditions:
- Mid-Day Meal Schemes: Meals provided under government-sponsored schemes, such as the mid-day meal program, are exempt from GST.
- Catering Services by Charitable Organizations: Catering services offered by non-profit organizations or charitable institutions may be exempt from GST.
- Food Served in Educational Institutions: In certain cases, food served in schools, colleges, and hostels may be exempt from GST if it forms part of an educational package.
By understanding the applicable tax rates, GST registration, and the claiming of ITC, you can efficiently manage your business while ensuring GST compliance.
